Rouse sheds more space Two warehouses in Columbia sold for $36 million

Property portfolio pruned

Buyer is Penrose, on behalf of Pritzker family, as in '96 deal

June 12, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Rouse Co., as part of a continuing effort to prune its $5.3 billion property portfolio to focus on retail malls and high-end office buildings, sold two big Columbia warehouses yesterday for $36 million.

The sale of the buildings marks the second time since 1996 that a Virginia group representing the Pritzker family, of Hyatt Hotel Corp. fame, has acquired distribution space from Rouse in the Baltimore-Washington corridor.

With the purchase yesterday, the Penrose Group Inc., the Pritzker representatives, controls all three buildings making up the Gateway Commerce Center, which was once a General Electric Co. appliance manufacturing plant.

"We just feel that the [Baltimore-Washington] corridor is a very strong location for industrial uses, and that's what appealed to us about these buildings," said Ole Kollevoll, a Penrose Group partner.

In April 1996, the Chicago-based Pritzkers spent more than $16 million to buy from Rouse and renovate a 587,000-square-foot warehouse in Gateway Commerce Center, along with 15 adjacent acres.

The building is fully occupied by Revlon Inc., Giant Food Inc. and Price-Costco Inc.

The two Gateway Commerce buildings sold by Rouse yesterday, which total 1.29 million square feet, are fully occupied by Sears Logistics Corp., the Coast Guard and Jack & Jill Ice Cream.

Sears, which recently renewed its lease through 2008 at a cost of roughly $28 million, is also considering adding about 150 office workers to its appliance distribution operation.

For the Columbia-based real estate concern, the Pritzker sale marks the end of its more than decade-long ownership of the former GE buildings.

3 buildings vacated

Beginning in 1985, Rouse spent $40 million to buy the 440-acre complex from GE, after the Connecticut conglomerate shut down its operations and vacated the three buildings there.

Today, the Gateway office park that Rouse developed there contains nearly 5 million square feet of office, industrial, retail and research and development space.

"They are arguably one of the best distribution portfolios in the corridor, from a standpoint of creditworthy tenants, functionality and location," said David P. Scheffenacker Jr., president of Preston Partners Inc., whose business represented Penrose in the sale.

bTC The Penrose Group purchase is the latest sign that Rouse intends to concentrate on retail and office projects. Since 1994, Rouse has been shedding smaller retail centers, its Columbia Inn and Cross Keys Inn hotels, warehouses and other properties that the company believes do not fit well with its portfolio.

"Industrial buildings are not our primary focus," said David L. Tripp, a Rouse vice president. "And the market for industrial buildings is favorable right now, and we're able to get a solid price."

Instead, Rouse has been focusing on top-tier malls, community development and office parks in Nevada and California.

April deals

The real estate investment trust agreed in early April to spend $1.1 billion to buy seven upscale shopping malls -- including Towson Town Center -- from a Toronto company, a move intended not only to extend its local retail dominance, but also to boost its shopping center square footage by 20 percent.

That purchase, from Triz- ecHahn Corp., followed a $520 million transaction that merged the Howard Hughes Corp. of Las Vegas into Rouse's holdings.

With Hughes, Rouse gained a 22,500-acre planned community called Summerlin, along with dozens of office and distribution buildings.